-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MUryk7joZ0GVWEu6E9N9UGb55x9f8QoimFTm4ra+ITn9GWtBkDylg2Ju9W9TUyPm DdHgAyiOW8bx5iK/nB4lxg== 0000891554-96-000183.txt : 19960401 0000891554-96-000183.hdr.sgml : 19960401 ACCESSION NUMBER: 0000891554-96-000183 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUAKER CHEMICAL CORP CENTRAL INDEX KEY: 0000081362 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PRODUCTS OF PETROLEUM & COAL [2990] IRS NUMBER: 230993790 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-07154 FILM NUMBER: 96540873 BUSINESS ADDRESS: STREET 1: ELM AND LEE STS CITY: CONSHOHOCKEN STATE: PA ZIP: 19428 BUSINESS PHONE: 21583240119 MAIL ADDRESS: STREET 1: ELM & LEE STS CITY: CONSHOHOCKEN STATE: PA ZIP: 19428 10-K 1 ANNUAL REPORT ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1995 or |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for transition period from to Commission file number 0-7154 QUAKER CHEMICAL CORPORATION (Exact name of Registrant as specified in its charter) A Pennsylvania Corporation No. 23-0993790 (State or other jurisdiction of (I.R.S. EMPLOYER IDENTIFICATION NO.) incorporation or organization) Elm and Lee Streets, Conshohocken, Pennsylvania 19428 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (610) 832-4000 Securities registered pursuant to Section 12(b) of the Act: Name of each Exchange on Title of each class which registered None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $1.00 par value Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No ___. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ___ State the aggregate market value of the voting stock held by non-affiliates of the Registrant. (The aggregate market value is computed by reference to the last reported sale on the Nasdaq National Market System on March 15, 1996): $102,577,374. Indicate the number of shares outstanding of each of the Registrant's classes of common stock as of the latest practicable date: 8,669,320 shares of Common Stock, $1.00 Par Value, as of March 15, 1996. DOCUMENTS INCORPORATED BY REFERENCE (1) Portions of the Registrant's Annual Report to Shareholders for the year ended December 31, 1995 are incorporated into Parts I and II. (2) Portions of the Registrant's definitive Proxy Statement dated March 29, 1996 in connection with the Annual Meeting of Shareholders to be held on May 9, 1996 are incorporated into Part III. The exhibit index is located on page 12. ================================================================================ PART I As used in this Report, the term "Quaker," unless the context otherwise requires, means Quaker Chemical Corporation, its subsidiaries, and associated companies. Item 1. Business. General Description Quaker develops, produces, and markets a broad range of formulated chemical specialty products for various heavy industrial and manufacturing applications and, in addition, offers and markets chemical management services, including recycling services. Quaker's principal products and services include: (i) rolling lubricants (used by manufacturers of steel in the hot and cold rolling of steel); (ii) corrosion preventives (used by steel and metalworking customers to protect metal during manufacture, storage, and shipment); (iii) metal finishing compounds (used to prepare metal surfaces for special treatments such as galvanizing and tin plating and to prepare metal for further processing); (iv) machining and grinding compounds (used by metalworking customers in cutting, shaping, and grinding metal parts which require special treatment to enable them to tolerate the manufacturing process); (v) forming compounds (used to facilitate the drawing and extrusion of metal products); (vi) paper production products (used as defoamers, release agents, softeners, debonders, and dispersants); (vii) hydraulic fluids (used by steel, metalworking, and other customers to operate hydraulically activated equipment); (viii) products for the removal of hydrogen sulfide in various industrial applications; (ix) chemical milling maskants for the aerospace industry; (x) construction products such as flexible sealants and protective coatings for various applications; and (xi) programs to provide recycling and chemical management services. In 1995, the Company acquired 90% of the outstanding common stock of Celumi Ltda. (located in Brazil), a supplier of chemical specialty products to the metalworking industry, and a 60% interest in a joint venture with Wuxi Quaker Chemical Company Limited to manufacture lubricants for the cold rolling of steel and other products for the steel industry in China. For additional information regarding these transactions, see Note 10 of Notes to Consolidated Financial Statements which appears on p. 27 of the Registrant's 1995 Annual Report to Shareholders, the incorporated portions of which are included as Exhibit 13 to this Report. Substantially all of Quaker's sales worldwide are made directly through its own sales force. Quaker sales persons visit the plants of customers regularly, and through training and experience, identify production needs which can be resolved or alleviated either by adapting Quaker's existing products or by applying new formulations developed in Quaker's laboratories. Sales personnel may call upon Quaker's regional managers, product managers, and members of its laboratory staff for assistance in obtaining and setting up product tests and evaluating the results of such tests. In 1995, certain products were also sold in Canada, Korea, and India by exclusive licensees under long-term royalty agreements. Generally, separate manufacturing facilities of a single customer are served by different sales personnel. Competition The chemical specialty industry is composed of a number of companies of similar size as well as companies larger and smaller than Quaker. Quaker cannot readily determine its precise position in the industry. Many competitors are in fewer and more specialized product classifications or provide different levels of technical services in terms of specific formulations for individual customers. Competition in the industry is based primarily on the ability to provide products which meet the needs of the customer and render technical services and laboratory assistance to customers and, to a lesser extent, on price. Major Customers During 1995, Quaker's five largest customers (each composed of multiple subsidiaries or divisions with semi-autonomous purchasing authority) accounted for approximately 13% of its consolidated net sales with the largest of these customers accounting for approximately 3% of consolidated net sales. Raw Materials Quaker uses over 500 raw materials, including mineral oils, fats and fat derivatives, ethylene derivatives, solvents, surface active agents, chlorinated paraffinic compounds, and a wide variety of organic and inorganic compounds. In 1995, only one raw material accounted for as much as 12% of the total cost of Quaker's raw material purchases. Quaker has multiple sources of supply for most materials, and management believes that the failure of any single supplier would not have a material adverse effect upon its business. Patents and Trademarks Quaker has a limited number of patents and patent applications, including patents issued, applied for, or acquired in the United States and in various foreign countries, some of which may prove to be material to its business. Principal reliance is placed upon Quaker's proprietary formulae and the application of its skills and experience to meet customer needs. Quaker's products are identified by trademarks which are registered throughout its marketing area. Quaker makes little use of advertising but relies heavily upon its reputation in the markets which it serves. 2 Research and Development--Laboratories Quaker's research and development laboratories are directed primarily toward applied research and development since the nature of Quaker's business requires continuing modification and improvement of formulations to provide chemical specialties to satisfy customer requirements. Quaker maintains quality control laboratory facilities in each of its manufacturing locations. In addition, Quaker maintains in Conshohocken, Pennsylvania, laboratory facilities which are devoted primarily to applied research and development. Most of Quaker's subsidiaries and associates also have laboratory facilities. Although not as complete as the Conshohocken laboratories, these facilities are generally sufficient for the requirements of the customers being served. If problems are encountered which cannot be resolved by local laboratories, such problems may be referred to the corporate laboratory staff, which also defines and supervises corporate research projects. Approximately 160 persons, of whom 84 have B. S. degrees and 34 have B.S. and advanced degrees, are employed in Quaker's laboratories. Number of Employees On December 31, 1995, Quaker's consolidated companies had 870 full-time employees of whom 388 were employed by the parent company and its U.S. subsidiaries and 482 were employed by its non-U.S. subsidiaries. Associated non-U.S. companies of Quaker (in which it owns 50% or less) employed 146 people on December 31, 1995. Product Classification Incorporated by reference is the information concerning product classification by markets served appearing under the caption "Supplemental Financial Information" on page 32 of the Registrant's 1995 Annual Report to Shareholders, the incorporated portions of which are included as Exhibit 13 to this Report. Non-U.S. Activities Incorporated by reference is the information concerning non-U.S. activities appearing in Note 9 to Notes to Consolidated Financial Statements on page 27 of the Registrant's 1995 Annual Report to Shareholders and under the caption "General" of the Operations section of Management's Discussion and Analysis of Financial Condition and Results of Operations which appears on page 15 3 of the aforementioned Annual Report, the incorporated portions of which are included as Exhibit 13 to this Report. Item 2. Properties. Quaker's principal facilities in the United States are located in Conshohocken, Pennsylvania and Detroit, Michigan. Quaker's non-U.S. subsidiaries own facilities in Woodchester, England; Uithoorn, The Netherlands; Villeneuve, France; and Santa Perpetua de Mogoda, Spain and lease small sales facilities in other locations. All of these facilities are owned mortgage free. Financing for the Technical Center in Conshohocken, Pennsylvania was arranged through the use of industrial revenue and development bonds with an outstanding balance at December 31, 1995 of $5,000,000. Quaker's aforementioned facilities consist of various manufacturing, administrative, warehouse, and laboratory buildings. Substantially all of the buildings are of fire-resistant construction and are equipped with sprinkler systems. All facilities are primarily of masonry and/or steel construction and are adequate and suitable for Quaker's present operations. The Company has a program to identify needed capital improvements which will be implemented as management considers necessary or desirable. Most locations have various numbers of raw material storage tanks ranging from 6 to 63 having a capacity from 500 to 80,000 gallons each and processing or manufacturing vessels ranging in capacity from 50 to 12,000 gallons each. In order to facilitate compliance with applicable federal, state, and local statutes and regulations relating to occupational health and safety and protection of the environment, the Company has an ongoing program of site assessment, currently directed primarily to facilities in the United States for the purpose of identifying capital expenditures or other actions that may be necessary to comply with such requirements. The program includes periodic inspections of each facility in the United States by Quaker and/or independent environmental experts, as well as ongoing inspections by on-site personnel. Such inspections are addressed to operational matters, record-keeping, reporting requirements, and capital improvements. In 1995, capital expenditures directed solely or primarily to regulatory compliance amounted to approximately $1,800,000. Quaker's executive offices are located in a four-story building containing a total of approximately 47,000 square feet. A Technical Center containing approximately 28,700 square feet houses the laboratory facility. Both of these facilities are adjacent to Quaker's manufacturing facility in Conshohocken. Quaker's 50% or less owned non-U.S. associates own or lease a plant and/or sales facilities in various locations. 4 Item 3. Legal Proceedings. The Company is a party to proceedings, cases, and requests for information from, and negotiations with, various claimants and federal and state agencies relating to various matters including environmental matters, none of which is expected to result in monetary sanctions in an amount or in an award that would have a material adverse effect on the Company's results of operations or financial condition. For information concerning pending asbestos-related cases against a non-operating subsidiary and amounts accrued associated with certain environmental investigatory and noncapital remediation costs, refer to Note 11 of Notes to Consolidated Financial Statements which appears on page 28 in the Registrant's 1995 Annual Report to Shareholders, the incorporated portions of which are included as Exhibit 13 to this Report. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of security holders during the last quarter of the period covered by this Report. Item 4(a). Executive Officers of the Registrant.
Year First Elected as an Executive Name Office (since) Age Officer ---- -------------- --- ------- Peter A. Benoliel Chairman of the Board (1980) 64 1963 Ronald J. Naples President and Chief 50 1995 Executive Officer (1995) Jose Luiz Bregolato Vice President-South America 50 1993 (1993) Daniel S. Ma Vice President-Asia/Pacific 55 1995 (1995) Marcus C. J. Meijer Vice President-Europe (1990) 48 1990 Clifford E. Montgomery Vice President-Human Resources 48 1990 (1990)
All of the Executive Officers with the exception of Messrs. Bregolato, Ma, and Naples have served as officers of the Registrant for more than the past five years. Prior to his election as an officer of the Registrant, Mr. Bregolato served as Financial Consultant and Administrative Director of Fabrica Carioca de Catalisadores, S.A. to which he was appointed in 1985. Prior to his election as an officer of the Registrant, Mr. Ma was Managing Director, Asia/Pacific Region, to which he was appointed in 5 1993 and was Business Manager, PPG Industries from 1991 to 1993. Prior to his election as President and Chief Executive Officer, effective October 2, 1995, Mr. Naples served as Chairman of the Board and Chief Executive Officer of Hunt Manufacturing Company until April 6, 1995, a position held for over five years. Mr. Naples has been a Director of the Registrant since 1988. There is no family relationship between any of the Registrant's Executive Officers. Each officer is elected for a term of one year. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. Incorporated by reference is the information appearing under the caption "Stock Market and Related Security Holder Matters" on page 32 of the Registrant's 1995 Annual Report to Shareholders, the incorporated portions of which are included as Exhibit 13 to this Report. Item 6. Selected Financial Data. Incorporated by reference is the information appearing under the caption "Eleven-Year Financial Information" on pages 30 and 31 of the Registrant's 1995 Annual Report to Shareholders, the incorporated portions of which are included as Exhibit 13 to this Report. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Incorporated by reference is the information appearing under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 14 and 15 of the Registrant's 1995 Annual Report to Shareholders, the incorporated portions of which are included as Exhibit 13 to this Report. Item 8. Financial Statements and Supplementary Data. Incorporated by reference is the information appearing on pages 13 through 32 of the Registrant's 1995 Annual Report to Shareholders, the incorporated portions of which are included as Exhibit 13 to this Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 6 PART III Item 10. Directors and Executive Officers of the Registrant. Incorporated by reference is the information beginning immediately following the caption "Election of Directors" to, but not including, the caption "Executive Compensation" contained in the Registrant's definitive Proxy Statement to be filed no later than 120 days after the close of its fiscal year ended December 31, 1995 (the "1996 Proxy Statement") and the information appearing in Item 4(a) on page 5 of this Report. Based solely on the Company's review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act"), as amended, and written representations of the Company's officers and directors, the Company believes that all reports required to be filed pursuant to the 1934 Act with respect to transactions in the Company's Common Stock through December 31, 1995 were filed on a timely basis except for one filing on Form 4 covering one transaction each for Patricia C. Barron, Lennox K. Black, and Edwin J. Delattre. Item 11. Executive Compensation. Incorporated by reference is the information beginning immediately following the caption "Executive Compensation" to, but not including, the caption "Compensation/Management Development Committee Report on Executive Compensation" contained in the Registrant's 1996 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management. Incorporated by reference is the information beginning immediately following the caption "Security Ownership of Certain Beneficial Owners and Management" to, but not including, the caption "Election of Directors" contained in the Registrant's 1996 Proxy Statement. Item 13. Certain Relationships and Related Transactions. No information is required to be provided in response to this Item 13. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) Exhibits and Financial Statement Schedules 7 1. Financial Statements The following is a list of the Financial Statements and related documents which have been incorporated by reference from the Registrant's Annual Report to Shareholders for the fiscal year ended December 31, 1995, as set forth in Item 8: Consolidated Statement of Operations Consolidated Balance Sheet Consolidated Statement of Cash Flows Consolidated Statement of Shareholders' Equity Notes to Consolidated Financial Statements Report of Independent Accountants 2. Financial Statement Schedules All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Financial statements of 50% or less owned companies have been omitted because none of the companies meets the criteria requiring inclusion of such statements. 3. Exhibits (numbered in accordance with Item 601 of Regulation S-K) 3(a)--Articles of Incorporation. Incorporated by reference to Exhibit 3(a) to Form 10-Q as filed by the Registrant for the quarter ended March 31, 1987. 3(b)--By-Laws. Incorporated by reference to Exhibit 3(b) to Form 10-Q as filed by the Registrant for the quarter ended June 30, 1993. 4 --Shareholder Rights Plan. Incorporated by reference to Form 8-K as filed by the Registrant on February 20, 1990. 8 10(a)--Long-Term Performance Incentive Plan as approved May 5, 1993. Incorporated by reference to Exhibit 10(a) as filed by the Registrant with Form 10-K for the year 1993. 10(b)--Employment Agreement by and between Registrant and Peter A. Benoliel. Incorporated by reference to Exhibit 10(b) as filed by Registrant with Form 10-K for the year 1989.* 10(f)--Employment Agreement by and between Registrant and Clifford E. Montgomery. Incorporated by reference to Exhibit 10(i) as filed by Registrant with Form 10-K for the year 1990.* 10(h)--Documents constituting employment contract by and between Quaker Chemical Europe B.V. and M. C. J. Meijer. Incorporated by reference to Exhibit 10(h) as filed by Registrant with Form 10-K for the year 1993.* 10(i)--Employment Agreement by and between the Registrant and Ronald J. Naples. Incorporated by reference to Exhibit 10(i) as filed by Registrant with Form 10-Q for the quarter ended September 30, 1995.* 10(j)--Amendment to the Stock Option Agreement by and between the Registrant and Ronald J. Naples. Incorporated by reference to Exhibit 10(i) as filed by Registrant with Form 10-Q for the quarter ended September 30, 1995.* 10(k)--Employment Agreement by and between Registrant and Jose Luiz Bregolato.* 10(l)--Employment Agreement by and between Registrant and Daniel S. Ma.* 13 --Portions of the 1995 Annual Report to Shareholders incorporated by reference. 21 --Subsidiaries and Affiliates of the Registrant. 23 --Consent of Independent Accountants. 27 --Financial Data Schedule. * A management contract or compensatory plan or arrangement required to be filed as an exhibit to this Report. (b) Reports on Form 8-K. No reports on Form 8-K were filed by the Registrant during the last quarter of the period covered by this Report. 9 (c) The exhibits required by Item 601 of Regulation S-K filed as part of this Report or incorporated herein by reference are listed in subparagraph (a)(3) of this Item 14. (d) The financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. 10 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. QUAKER CHEMICAL CORPORATION --------------------------------------------- Registrant Date: March 29, 1996 By: RONALD J. NAPLES ---------------------------------------- Ronald J. Naples President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signatures Capacity Date ---------- -------- ---- RONALD J. NAPLES - ------------------------------------------ Principal Executive Officer and March 29, 1996 Ronald J. Naples Director President and Chief Executive Officer RICHARD J. FAGAN - ------------------------------------------ Principal Accounting Officer March 29, 1996 Richard J. Fagan Corporate Controller and Acting Treasurer PETER A. BENOLIEL - ------------------------------------------ Director March 29, 1996 Peter A. Benoliel, Chairman of the Board JOSEPH B. ANDERSON, JR. - ------------------------------------------ Director March 29, 1996 Joseph B. Anderson, Jr. PATRICIA C. BARRON - ------------------------------------------ Director March 29, 1996 Patricia C. Barron WILLIAM L. BATCHELOR - ------------------------------------------ Director March 29, 1996 William L. Batchelor LENNOX K. BLACK - ------------------------------------------ Director March 29, 1996 Lennox K. Black EDWIN J. DELATTRE - ------------------------------------------ Director March 29, 1996 Edwin J. Delattre FRANCIS J. DUNLEAVY - ------------------------------------------ Director March 29, 1996 Francis J. Dunleavy ROBERT P. HAUPTFUHRER - ------------------------------------------ Director March 29, 1996 Robert P. Hauptfuhrer FREDERICK HELDRING - ------------------------------------------ Director March 29, 1996 Frederick Heldring ALEX SATINSKY - ------------------------------------------ Director March 29, 1996 Alex Satinsky
11 EXHIBIT INDEX Exhibit No. Description ----------- ----------- 10(k) Employment Agreement by and between Registrant and Jose Luiz Bregolato 10(l) Employment Agreement by and between Registrant and Daniel S. Ma 13 Portions of the 1995 Annual Report to Shareholders Incorporated by Reference 21 Subsidiaries and Affiliates of the Registrant 23 Consent of Independent Accountants 27 Financial Data Schedule 12 EX-10.K 2 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT, made and entered into as of the 14 day of June, 1993, by and between QUAKER CHEMICAL CORPORATION, a Pennsylvania corporation (hereinafter referred to as "QUAKER"), and JOSE LUIZ BREGOLATO (hereinafter referred to as "BREGOLATO"). W I T N E S S E T H: WHEREAS, QUAKER wishes to employ BREGOLATO and BREGOLATO wishes to be employed by QUAKER; NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, and intending to be legally bound hereby, the parties hereto agree as follows: 1. QUAKER agrees to employ BREGOLATO and BREGOLATO agrees to serve QUAKER as Vice President-South America of QUAKER and such other executive and administrative duties as shall be assigned to him by the Board of Directors or President of QUAKER. 2. The term of BREGOLATO's employment shall commence on 14 June 1993 and continue for an indefinite period of time. 3. QUAKER shall pay to BREGOLATO and BREGOLATO shall accept an annual rate of salary as set forth in Exhibit A attached hereto, payable semi-monthly, during the term of this Employment Agreement or any extension or renewal thereof. 4. BREGOLATO shall participate in such QUAKER Incentive Programs as described and set forth in Exhibit A. As an Officer of Exhibit 10(k) Page 1 QUAKER, the particulars of Exhibit A may be amended by the Board of Directors at any time as to any matter set forth therein including rate of annual salary, eligibility to participate in any given QUAKER incentive plan, the level of participation in any QUAKER incentive plan, and the terms and conditions of any QUAKER incentive plan. Any changes to Exhibit A shall not affect any of the other terms and conditions hereof including, without limitation, the provisions of Paragraph 10. For the purposes of this Agreement, the term "QUAKER Incentive Program" shall refer to each individual as well as the combined incentive programs approved by the Board of Directors. Revisions to Exhibit A shall become effective upon notification in writing by QUAKER. 5. BREGOLATO shall also receive vacation time equal to thirty calendar days annually and a compensation equal to a half-month salary. 6. In the event of the death of BREGOLATO during which this Employment Agreement is in effect, and as to which no notice of termination has been given by either party, QUAKER shall (a) continue to pay a sum of money equal to the salary that would have been paid to him for four months following his death just as if he were living, and (b) QUAKER shall pay a death benefit payment in the amount of BREGOLATO's annual salary as set forth in Paragraph 3 hereof, plus the sum of $30,000, and payment thereof shall be made, without interest, in three equal payments respectively within 16, 28, and 40 months after the date of his death. Payments made pursuant to this Paragraph 6 shall be made to the person or persons Exhibit 10(k) Page 2 who may be designated by BREGOLATO, in writing, and, in the event he fails to so designate to whom payments shall be made, payments shall be made to BREGOLATO's personal representatives. 7. BREGOLATO covenants and agrees that he will, during the term of this Employment Agreement or any extension or renewal thereof, devote his knowledge, skill, and working time solely and exclusively to the business and interests of QUAKER. BREGOLATO further covenants and agrees that he will not, during the term of this Employment Agreement or any extension or renewal thereof, directly or indirectly, enter into any business or employment of a similar nature as QUAKER or of any wholly or partially-owned subsidiary of QUAKER (as owner, employee, agent, or otherwise) unless QUAKER consents in writing to such activity. 8. BREGOLATO covenants and agrees that he will, during and after the termination of his employment hereunder, hold inviolate and keep secret all knowledge or information obtained by him or developed by him from or out of his employment including, but not limited to, trade secrets, materials used, trade practices, names of customers, formulae, and processes of manufacture, all of which shall be and shall remain the sole and absolute property of QUAKER and/or its subsidiaries, as the case may be, and that he will not impart or make known any of such knowledge or information to any person, firm, or corporation except when specifically authorized so to do in writing signed by the Chairman of the Board or the President of QUAKER. Exhibit 10(k) Page 3 9. BREGOLATO covenants and agrees that for a period of one year after the termination of his employment hereunder, he will not, directly or indirectly, solicit, cause to be solicited, or aid in soliciting the business of any accounts sold or solicited by QUAKER or by any of its subsidiary or affiliated companies, or any joint venture of which QUAKER is a party, during the period of his employment by QUAKER. The foregoing is intended to apply only to such activities which may relate to the selling of products or materials similar in nature or functional usage to those manufactured and/or sold by QUAKER, or by any of its subsidiary or affiliated companies or such joint ventures, and, as well, to any advisory services with respect thereto. In addition, BREGOLATO covenants and agrees that after termination, he will not at any time seek to hire or engage as a consultant any QUAKER employee. 10. The purpose of this Paragraph 10 is to reinforce and encourage the continued dedication and attention of BREGOLATO to BREGOLATO's assigned duties under this Employment Agreement without distraction as a result of circumstances which may arise from the possibility of a change of control or an attempt to change the control of QUAKER. (a) Upon the occurrence of a "First Event," QUAKER will deposit in an escrow account at Philadelphia National Bank (or such other bank as QUAKER may hereafter designate) (the "Bank") an amount equal to BREGOLATO's then current annual salary for an eighteen (18) month period ("Termination Pay"). A "First Event" Exhibit 10(k) Page 4 for the purposes of this Agreement shall mean any one of the following events. (1) Shares of QUAKER's Common Stock are acquired (other than directly from QUAKER in exchange for cash or property) by any person (as used in Sections 13 and 14 of the Act) other than a person who is a present Officer or Director of QUAKER, who thereby becomes the beneficial owner (as defined in Rule 13d-3 under the Act) of more than 10% of the issued and outstanding shares of QUAKER's Common Stock. (2) Any person, firm, or corporation (including a shareholder of QUAKER) makes a tender offer or exchange offer for, or a request or invitation for tenders or exchanges of, shares of QUAKER's Common Stock. (b) If a "Second Event" shall occur and thereafter (but within three (3) years after date of the occurrence of the First Event) BREGOLATO's employment with QUAKER shall terminate for a reason other than (I) BREGOLATO's death, (II) BREGOLATO's normal retirement for age, (III) BREGOLATO's physical or mental disability in accordance with prevailing QUAKER policy, (IV) by QUAKER as a Termination for Cause, or (V) by BREGOLATO other than as a Termination for Good Reason, BREGOLATO may demand that the Bank pay BREGOLATO the Termination Pay (the "Demand"). A "Second Event" for the purposes of this Agreement shall mean any of the following events occurring after a First Event: Exhibit 10(k) Page 5 (1) A new Director of QUAKER is elected in an election in which the acquirer of the shares or the offeror or the requester voted, in person or by proxy, and such new Director was not nominated as a candidate in a proxy statement forwarded to shareholders by QUAKER's management prior to the occurrence of the First Event. (2) More than 20% of the issued and outstanding shares of QUAKER's Common Stock are owned by one person (as used in Sections 13 and 14 of the Act) other than a person who is a present Officer or Director of QUAKER. (3) During any period of two consecutive calendar years, individuals who at the beginning of such period constitute QUAKER's Board of Directors cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by QUAKER's shareholders of each new Director was approved by a vote of at least two-thirds (2/3) of the Directors then still in office who were Directors at the beginning of the two (2) year period. (c) After the receipt of the Demand, the Bank will pay BREGOLATO the Termination Pay in eighteen (18) equal consecutive monthly installments, the first such installment to be paid within thirty (30) days from the date of the demand. BREGOLATO shall not be required to diminish the amount of any payment to which he is entitled under this subparagraph (c) by seeking other employment or otherwise, nor shall the amount of any payment provided for in this subparagraph (c) be reduced by any compensation earned by BREGOLATO Exhibit 10(k) Page 6 as the result of employment by another employer after the date of termination. (d) QUAKER may withdraw the deposited Termination Pay if three (3) years elapse from the date of deposit thereof, and if no demand has been made. If, prior to the expiration of said three (3) year period, there shall occur another First Event, QUAKER will not be required to make an additional deposit of Termination Pay, but the three (3) year period described herein shall be deemed to commence on the date of the occurrence of the last such First Event. (e) QUAKER shall pay the usual and customary charges of the Bank for acting as escrow agent. QUAKER will be entitled to the payment of any and all interest and other income earned by the Bank through the investment of the deposited Termination Pay. Said interest shall be paid to QUAKER as earned. The escrow arrangement may be subject to the Bank's usual rules and procedures, and QUAKER will indemnify the Bank against any loss or liability for any action taken by it in good faith as escrow agent. 11. In the event that QUAKER, in its sole discretion and at any time terminates this Agreement with BREGOLATO, QUAKER agrees to provide BREGOLATO with reasonable out-placement assistance and a severance payment that shall be equal to but not less than an amount equal to six months' compensation, which shall be increased by one month for each additional year of employment up to a maximum of twelve months' compensation. Exhibit 10(k) Page 7 12. Termination. This Employment Agreement also can be terminated at any time by "Termination for Cause" or "Termination for Good Reason" as defined in Paragraph 13. 13. Definitions. For the purposes of this agreement, the following definitions shall apply and will be used: (a) "Act" means the Securities Exchange Act of 1934, as amended; (b) "QUAKER's Common Stock" means shares of Common Stock, $1.00 par value, of QUAKER; (c) "Termination for Cause" means BREGOLATO's employment with QUAKER shall have been terminated by QUAKER by reason of either: (A) The willful and continued failure by BREGOLATO substantially to perform BREGOLATO's duties under this Employment Agreement; or (B) The willful engaging by BREGOLATO in a continued course of misconduct which is materially injurious to QUAKER, monetarily or otherwise. BREGOLATO shall have been given notice thereof from QUAKER's Board of Directors and an opportunity (with counsel) to be heard by said Board of Directors, and the Board of Directors shall have made a reasonable and good faith finding that BREGOLATO was guilty of the conduct set forth in clause (A) or (B) hereof. (d) "Termination for Good Reason" means BREGOLATO's employment with QUAKER shall have been terminated by BREGOLATO by reason of a material change announced or promulgated by QUAKER in Exhibit 10(k) Page 8 the terms, conditions, duties, compensation, or benefits of BREGOLATO's employment with QUAKER and not agreed to by BREGOLATO. 14. This Employment Agreement contains all the agreements and understandings between the parties hereto with respect to BREGOLATO's employment by QUAKER and supersedes all prior or contemporaneous agreements with respect thereto. This Employment Agreement shall be binding upon and for to the benefit of the parties hereto and their respective personal representatives, successors, and assigns. IN WITNESS WHEREOF, QUAKER has caused this Employment Agreement to be signed by its President, thereunto duly authorized, and its corporate seal to be hereunto affixed and attested by its Vice President and Corporate Secretary, and BREGOLATO has hereunto set his hand and seal all as of the day and year first above written. ATTEST: QUAKER CHEMICAL CORPORATION [SEAL] By: - ------------------------------ ----------------------------- Karl H. Spaeth Vice President and Corporate Secretary WITNESS: - ------------------------------ ------------------------------- Exhibit 10(k) Page 9 EMPLOYMENT AGREEMENT EXHIBIT A Effective: Name of Employee: Jose Luiz Bregolato Address: Rua Ipanema 151/902 22631-390 Barra da Tijuca Rio de Janeiro - RJ - Brasil Title: Vice President-South America Annual Rate of Salary at Starting Date: $105,000* * It is agreed that on a semi-monthly basis, Bregolato is authorized to withdraw cruzeiros in the amount equal to U.S. dollars pro-rated on a semi-monthly basis. While not guaranteed, this amount may be amended based on performance. Participation in Quaker Incentive Programs through 1993 It is understood that under conditions of the Quaker incentive programs, changes in the percentage of award criteria are possible in response to business requirements. Incentive Bonus Plan Bonus will be based on the following award criteria of Quaker's Incentive Bonus Plan Corporation Financial Results 35% South America Financial Results 25% Personal Goals 40% Target Award will be $57,750. Award to be prorated in 1993 to reflect actual employment period. For the year 1993 only, the Incentive Bonus payable will not be less than $20,000. Long-Term Performance Incentive Plan Type of stock options offered - Incentive Number of shares subject to option - 20,000 Performance Incentive Units - 10,000 Option price per share - Closing price on effective date hereof Exhibit 10(k) Page 10 Participation under and subject to the terms of a Stock Option Agreement Automobile Allowance To be allowed an automobile similar in style to a Chevrolet Omega 3.0 (6 cylinder) with Quaker to pay all operating expenses, except for vacation travel. It will be traded in on a new vehicle every three years. Housing Quaker will provide a company loan equal to the outstanding balance of Bregolato's existing loan ($35,000), repayable over five years and on the following terms and conditions -- 1. Bregolato hereby acknowledges receipt of a loan for housing from Quaker Chemical Corporation in the amount of $US 35,000.00. 2. In consideration of the foregoing and intending to be legally bound hereby, Bregolato agrees to repay the loan in 5 equal payments of $US 7,000.00 each beginning June 1, 1994 and June 1 of each year thereafter, by check payable to Quaker Chemical Corporation and delivered to W. G. Hamilton, Corporate Treasurer, Quaker Chemical Corporation, Elm and Lee Streets, Conshohocken, PA 19428 3. The loan shall be interest free and no interest shall be payable with respect to the outstanding principal. 4. Should Bregolato's employment with Quaker Chemical Corporation (or any subsidiary or affiliate thereof) cease for any reason, the outstanding balance of the loan shall immediately become due and payable in full on the date active employment ceases. School Costs Quaker will reimburse Bregolato for up to 50% of school costs of children, not to exceed $250.00 per month, for a period of two years. Reasonable English language instruction will be provided Bregolato's wife. Medical/Dental; Pension; Life Insurance Quaker will provide or assist in providing medical/dental, pension, and life insurance coverage using Quaker's United States practices as general guidelines. Coverage may not be equal or equivalent. Exhibit 10(k) Page 11 Expenses Quaker will reimburse Bregolato for reasonable expenses incurred in the conduct of business, including the installation of a telephone line, provided requests for reimbursement are properly documented, submitted, and approved. Vacation Allowable vacation time will be equal to thirty calendar days annually and compensation equal to half-month salary. Exhibit 10(k) Page 12 EX-10.L 3 EMPLOYMENT LETTER May 12, 1993 Mr. Daniel S. Ma A-2 Hayden Court 25-27 South Bay Close Hong Kong Dear Daniel: It is with great pleasure that I confirm our discussions, and the following represents our formal offer to you for the position of General Manager, Asia Pacific. Base Salary Your base salary for this position will be $110,000 USD, plus a cost-of-living (COL) adjustment of 10%. Total remuneration will be $121,000. Incentive Compensation Your incentive compensation target award will be 45% of your base salary or $49,500. Your target award weighting will be 35% Corporate, 35% Asia Pacific Operations, and 30% personal goals. Your guarantee for 1993 will be $15,000. An explanation of the plan is attached. Automobile You are authorized to purchase an automobile similar in class to the Toyota Camry with a target price of $30,000. The company will reimburse all operating expenses. Housing The company will pay for all rent, utilities, and maintenance fees generated from your housing. It is understood that you will contribute 12% of your base pay annually reflecting your contribution towards the housing expense. Exhibit 10(l) Page 1 Page 2 Mr. Daniel Ma May 12, 1993 PPG Sign-On Bonus Quaker agrees to reimburse you up to a limit of $30,000 for any repayment of sign-up bonus to PPG subsequent to negotiations. Payment of this amount would be generated in response to a presentation of a formal PPG document requesting repayment of the sign-up bonus or a portion thereof. American Club The company agrees to compensate annual dues and appropriate business expenses for membership in the Hong Kong/American Club. Any utilization of the club for personal or private use will be at your expense. Medical Assistance, Life and Disability Insurance Under this Agreement, you will participate in the Quaker Flex-Benefit Plan to include medical, dental, disability, and life insurance. It is understood that under the Flex-Benefit Plan, there will be an employee co-pay requirement depending upon benefits selected. Home Leave One round trip per year for you and your wife will be provided tourist class to the United States. Vacation Four weeks annually. Tax Equalization You will be responsible for all U.S. taxes with Quaker reimbursing all non-U.S. tax liability, if any. Tax preparation will be provided for by Price Waterhouse. Repatriation At the end of the assignment or retirement, Quaker agrees to repatriate you and your family to the United States. Should you elect to leave Quaker prior to either of these events, Quaker will be absolved of any responsibility for repatriation payments. Exhibit 10(l) Page 2 Page 3 Mr. Daniel Ma May 12, 1993 This job offer is contingent upon your taking a company-paid physical and passing (negative result) a company-paid substance abuse (drug/alcohol) test. Please contact Cliff Montgomery (215/832-4140) to make arrangements. This offer is being held exclusively for you until May 21, 1993. Please sign on the space indicated below and return to me. If you have any questions, please do not hesitate to call Cliff or me. I am looking forward to hearing from you soon - at which time we will discuss potential starting dates and travel arrangements for your participation in our Global Meeting, June 26-30, at the Sagamore on Lake George, New York. Sincerely yours, Accepted: S. W. W. Lubsen ------------------------------------ Daniel S. Ma /np cc: K. K. Lam ------------------------------------- C. E. Montgomery Date Exhibit 10(l) Page 3 EX-13 4 ANNUAL REPORT QUAKER CHEMICAL CORPORATION financial review 1995 Annual Report Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 14 Consolidated Statement of Operations............................... 16 Consolidated Balance Sheet......................................... 17 Consolidated Statement of Cash Flows............................... 18 Consolidated Statement of Shareholders' Equity..................... 19 Notes to Consolidated Financial Statements......................... 20 Report of Independent Accountants.................................. 29 Eleven-Year Financial Summary...................................... 30 Supplemental Financial Information................................. 32 Quaker Chemical Corporation MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources Notwithstanding the impact of lower operating results experienced in 1995, management continues to believe that the Company is in sound financial condition and is capable of generating adequate cash to meet the needs of current operations and to fund strategic initiatives. Net cash flow provided by operating activities amounted to $7.3 million in 1995 compared to $4.4 million in 1994. The increase principally resulted from the receipt by a non-operating subsidiary of $2.5 million from an insurance carrier and a decrease in the amount of cash outlays associated with the 1993 repositioning program of approximately $1.8 million. Other major sources and uses of cash during 1995 included: a cash receipt of $2.0 million related to the 1993 sale of certain of the Company's petroleum production chemical operations assets, the principal component of which was the SULFA-SCRUB(R) patents and technology; the purchase of a 90% interest in Celumi Ltda., a Brazilian metalworking business, for approximately $7.7 million; $9.8 million in expenditures for additions to property, plant, equipment and other assets; payments of $3.6 million for 250,000 outstanding shares of the Company's common stock as part of a share repurchase program; and investments and advances of approximately $2.0 million in the Company's Fluid Recycling Services Company ("FRS") joint venture. These items, along with increases in operating working capital, were the principal reasons for a decrease of $21.6 million in the Company's net cash position (cash and cash equivalents less short-term borrowings and current portion of long-term debt, notes payable and capital leases). The current ratio was 1.4 to 1 in 1995 as compared to 2.0 to 1 in 1994 reflecting the impact of the aforementioned changes in net cash and operating working capital. Expenditures for property, plant and equipment in 1995 included upgrades of manufacturing capabilities at various locations and compliance programs relating to environmental and regulatory matters in the amount of $1.8 million. Capital expenditures for 1996 are expected to be in the range of $7-9 million and include various upgrades of manufacturing capabilities in the U.S. and Europe, and an estimated $1.6 million for environmental and regulatory compliance. The Company believes that funds generated internally should be sufficient to finance payments for capital expenditures. The Company has $10 million in a line of credit and believes that additional bank borrowings could be negotiated at competitive rates, based on its debt-equity ratio and current levels of operating performance. The Company is capable of supporting its operating requirements during 1996, payment of dividends to shareholders, stock repurchases and possible acquisition opportunities through internally generated funds supplemented with debt as needed. Operations Comparison of 1995 with 1994 Consolidated net sales for 1995 increased $32.4 million (17%) over 1994. The sales growth was a result of (i) a 5% increase in volume, (ii) a 4% improvement in price/mix primarily resulting from a series of price increases, (iii) a 5% positive impact from currency translation (fluctuations in foreign currency exchange rates used to translate local currency statements to U.S. dollars), and (iv) a 3% increase associated with acquisitions in Europe and Brazil. The volume improvement for the year was attributable primarily to increased core market sales in Europe and continued sales growth in the Asia/Pacific steel and can markets. Sales in the major U.S. markets were strong in the first half of 1995, but slowed somewhat in the second half as customer production levels declined in order to work down earlier buildups of inventories. In Europe, sales were strong throughout most of the year (despite a strike in France in the latter part of the fourth quarter) due to the strength of the economies in that region. Income from operations decreased from $15.2 million (after a $.5 million repositioning credit recorded in 1994) to $13.5 million in 1995. The decrease was due to a range of factors, the most significant of which were reduced margins associated with raw material cost inflation not covered by selling price increases, a less favorable sales mix, and increased expenses, particularly in the fourth quarter, related to staff reductions in some areas and regional growth initiatives in others. The Company's gross profit margin as a percentage of sales decreased 2.8% when compared to 1994 mainly as a result of the aforementioned raw material cost inflation, which did not show any abatement until well into the second half of 1995. Selling, administrative and general expenses as a percent of sales decreased 1.1% as the positive leverage effect of higher sales offset the above-noted increases in expenses. Net interest costs rose due to increased financing costs associated with the decline in the Company's net cash position. The decrease in equity in net income from associated companies for both the fourth quarter and full year was due primarily to business development investments in the Company's relatively new FRS joint venture. The positive influence of currency translation on net income was approximately $.07 per share and $.01 per share in 1995 and 1994, respectively. 14 The Company is cautiously optimistic about customer production levels and anticipates that raw material inflation will be modest in 1996. However, the principal challenges still facing the Company are the highly competitive nature of the pricing environment in the Company's major markets and the effective management of the Company's FRS joint venture. Given these factors, the Company is in the process of evaluating alternatives to improve margins and the utilization of assets. Comparison of 1994 with 1993 Consolidated net sales for 1994 were about even with 1993 as improved volume in core markets and an increase from 1993 acquisitions in France and Argentina fully offset the decrease in sales resulting from the divestiture of the Company's wholly-owned subsidiary, Quaker Construction Products, Inc. ("QCP"). The influence on net sales in 1994 of changes in price/mix and currency translation were negligible as a 1% reduction from price/mix was offset by a 1% increase from currency translation (fluctuations in foreign currency exchange rates used to translate local currency statements to U.S. dollars). The core market volume improvement was attributable primarily to increased customer production levels in the U.S. and Europe; synergistic benefits from a 1993 French metalworking company acquisition; increased revenue in the U.S. from total fluid and chemical management service contracts; and increased sales to the steel and can markets in the Asia/Pacific region. Sales to the major U.S. markets were steady throughout 1994. After a slow start, sales in Europe increased in the second half of the year, due in large part to the positive impact of the European economic recovery on steel and automotive production levels. Sales to the aircraft and aerospace industries were below 1993 due to continued low production levels. Income from operations before repositioning (credits) charges improved $5.4 million (55%) over 1993. The improvement over 1993 reflects the positive impact of increased volume in core markets and benefits associated with the 1993 repositioning program. These positive impacts were tempered somewhat by investment costs related to the enhancement of marketing capabilities and infrastructure in the Asia/Pacific and South America regions, as well as raw material cost inflation, particularly in Europe, which became evident late in the year. Pursuant to the plans identified in the Company's 1993 repositioning program, during 1994, the Company: substantially completed the consolidation of certain facilities in the United States and Europe; sold its manufacturing facilities in Pomona, California and Verona, Italy; divested the businesses of QCP; and achieved a majority of the workforce reductions outlined in the program. As of December 31, 1994, it was determined that the repositioning activities would be accomplished for less than originally anticipated and accordingly, the Company reduced operating expenses by $.5 million ($.3 million after tax or $.04 per share). Operating margins, before repositioning (credits) charges, improved in 1994, when compared to 1993 as a result of the aforementioned increased volume in core markets and cost savings associated with the repositioning program. The estimated after-tax financial savings generated in 1994 due to the repositioning program was approximately $.20 per share. Other income rose primarily as a result of increased royalty income. Interest expense declined slightly due to reduced overall borrowings in 1994 while interest income declined due to lower cash holdings by the Company. The decrease in equity in net income from associated companies was due primarily to business development investments in the Company's FRS joint venture. The positive influence of currency translation on net income in 1994 was approximately $.01 per share as compared to a negative currency translation influence of $.09 per share in 1993. General The Company is involved in environmental clean-up activities or litigation in connection with existing plant locations and former waste disposal sites (see Note 11). This involvement has not historically had, nor is it expected to have, a material effect on the Company's results of operations or financial condition. The Company does not use financial instruments which expose it to significant risk involving foreign currency transactions; however, the size of non-U.S. activities has a significant impact on reported operating results and the attendant net assets. During the past three years, sales by non-U.S. subsidiaries accounted for approximately 44-55% of the dollar amount of consolidated sales. In the same period, these subsidiaries accounted for approximately 59-81% of consolidated operating profit (see Note 9). The greater profitability of non-U.S. sales during this period is attributable to higher unit selling prices and lower fixed overhead and selling costs. 15 Quaker Chemical Corporation CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, - -------------------------------------------------------------------------------------------------------------------------------- 1995 1994 *1993 - -------------------------------------------------------------------------------------------------------------------------------- (Dollars in thousands except per share amounts) Net sales ........................................................... $ 227,038 $ 194,676 $ 195,004 Other income, net (Note 1) .......................................... 2,090 2,253 1,421 ----------------------------------------------- 229,128 196,929 196,425 ----------------------------------------------- Costs and expenses (Notes 1, 4 and 6): Cost of goods sold ................................................ 135,490 110,732 112,369 Selling, administrative and general expenses ...................... 80,115 70,955 74,242 Repositioning (credits) charges (Note 2) .......................... (525) 11,900 ----------------------------------------------- 215,605 181,162 198,511 ----------------------------------------------- Income (loss) from operations ....................................... 13,523 15,767 (2,086) Interest expense .................................................... (1,712) (1,303) (1,467) Interest income ..................................................... 286 457 1,376 ----------------------------------------------- Income (loss) before taxes .......................................... 12,097 14,921 (2,177) Taxes on income (Note 5) ............................................ 4,887 5,916 234 ----------------------------------------------- 7,210 9,005 (2,411) Equity in net (loss) income of associated companies (Note 1) ................................................ (78) 779 1,001 Minority interest in net income of subsidiaries ..................... (444) (382) (348) ------------------------------------------------ Net income (loss) ................................................... $ 6,688 $ 9,402 $ (1,758) =============================================== Per share data (Note 1): Net income (loss) ................................................. $ .76 $ 1.03 $ (.19) Dividends ......................................................... .68 .63 1/2 .60 1/2
The accompanying notes are an integral part of these financial statements. 16 Quaker Chemical Corporation CONSOLIDATED BALANCE SHEET
December 31, - ----------------------------------------------------------------------------------------------- 1995 1994 - ----------------------------------------------------------------------------------------------- (Dollars in thousands except per share amounts) Assets Current assets Cash and cash equivalents (Note 1) ............................... $ 7,230 $ 11,345 Accounts receivable, less allowance for doubtful accounts of $939 in 1995 and $547 in 1994 ....................................... 46,965 43,841 Inventories (Notes 1 and 4) Raw materials and supplies ..................................... 10,964 8,795 Work in process and finished goods ............................. 10,669 9,042 Deferred income taxes (Note 5) ................................... 1,415 1,576 Prepaid expenses and other current assets ........................ 9,475 8,801 ---------------------- Total current assets ........................................... 86,718 83,400 Investments in and advances to associated companies (Notes 1 and 3) 10,715 9,885 Property, plant and equipment, at cost (Note 1) Land ............................................................. 7,279 6,702 Buildings and improvements ....................................... 40,232 34,529 Machinery and equipment .......................................... 70,010 63,403 Construction in progress ......................................... 1,068 1,015 ---------------------- 118,589 105,649 Less accumulated depreciation .................................... 62,280 53,955 ---------------------- 56,309 51,694 ---------------------- Excess of cost over net assets of acquired companies (Note 1) ...... 18,973 12,262 Deferred income taxes (Note 5) ..................................... 5,349 4,971 Other noncurrent assets (Note 1) ................................... 7,344 7,960 ---------------------- 31,666 25,193 ---------------------- $ 185,408 $ 170,172 ====================== Liabilities and Shareholders' Equity Current liabilities Short-term borrowings and current portion of long-term debt, notes payable and capital leases (Note 7) ............................. $ 25,548 $ 8,062 Accounts payable ................................................. 20,969 20,575 Dividends payable ................................................ 1,473 1,500 Accrued liabilities Compensation ................................................... 5,671 5,174 Other (Note 2) ................................................. 6,721 7,003 Accrued taxes on income (Note 5) ................................. 486 440 ---------------------- Total current liabilities ...................................... 60,868 42,754 Long-term debt, notes payable and capital leases (Note 7) .......... 9,300 12,207 Deferred income taxes (Note 5) ..................................... 2,977 3,081 Accrued postretirement benefits (Note 6) ........................... 8,809 8,767 Other noncurrent liabilities (Note 2) .............................. 6,432 7,083 ---------------------- Total noncurrent liabilities ................................... 27,518 31,138 88,386 73,892 ---------------------- Minority interest in equity of subsidiaries (Note 1) ............... 3,030 2,603 ---------------------- Commitments and contingencies (Notes 1 and 11) Shareholders' equity (Note 8) Common stock, $1 par value; authorized 30,000,000 shares; issued (including treasury shares) 9,664,009 shares ..................... 9,664 9,664 Capital in excess of par value ................................... 780 649 Retained earnings ................................................ 87,852 87,137 Unearned compensation ............................................ (722) Foreign currency translation adjustments ......................... 12,333 9,856 ---------------------- 109,907 107,306 Treasury stock, shares held at cost; 1995-999,924, 1994-844,691 .. 15,915 13,629 ---------------------- 93,992 93,677 ---------------------- $ 185,408 $ 170,172 ======================
The accompanying notes are an integral part of these financial statements. 17 Quaker Chemical Corporation CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31, - --------------------------------------------------------------------------------------------------------- 1995 1994 1993 - --------------------------------------------------------------------------------------------------------- (Dollars in thousands) Cash flows from operating activities Net income (loss) ................................................. $ 6,688 $ 9,402 $ (1,758) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation .................................................. 6,764 6,524 6,545 Amortization .................................................. 1,883 726 1,021 Equity in net loss (income) of associated companies ........... 78 (779) (1,001) Minority interest in earnings of subsidiaries ................. 444 382 348 Proceeds from insurance settlement ............................ 2,500 Deferred income taxes ......................................... (499) (159) (491) Deferred compensation and other postretirement benefits ....... (585) (421) 254 Change in repositioning liability, net ........................ (1,546) (3,643) 9,700 Other, net .................................................... (464) (485) (181) Increase (decrease) in cash from changes in current assets and current liabilities, net of acquisitions and divestitures: Accounts receivable ........................................... (1,513) (7,341) 1,490 Inventories ................................................... (2,771) (2,126) 444 Prepaid expenses and other current assets ..................... (2,389) (1,837) (3,331) Accounts payable and accrued liabilities ...................... (1,357) 4,211 4,018 Estimated taxes on income ..................................... 58 (25) (261) -------------------------------- Net cash provided by operating activities ................... 7,291 4,429 16,797 -------------------------------- Cash flows from investing activities Short-term investments ............................................ 1,000 (854) Dividends from associated companies ............................... 565 1,022 785 Investments in property, plant, equipment and other assets ........ (9,833) (9,255) (8,960) Companies/businesses acquired excluding cash ...................... (7,728) (1,800) (11,271) Investments in and advances to associated companies ............... (1,970) (4,482) Purchase of patent, production technology and other related assets (854) Proceeds from sale of patent, production technology and other assets ................................................ 2,000 2,591 7,246 Proceeds from sale of subsidiary .................................. 10,864 Other, net ........................................................ (576) 463 (332) -------------------------------- Net cash (used in) provided by investing activities ......... (17,542) 403 (14,240) -------------------------------- Cash flows from financing activities Net increase in short-term borrowings ............................. 15,923 2,999 306 Notes payable and capital leases incurred ......................... 2,155 1,102 Repayment of long-term debt and capital leases .................... (3,857) (3,904) (2,997) Dividends paid .................................................... (5,973) (5,695) (5,525) Treasury stock issued ............................................. 1,439 617 971 Treasury stock acquired ........................................... (3,594) (8,241) Other ............................................................. (17) -------------------------------- Net cash provided by (used in) financing activities ......... 6,093 (14,224) (6,160) -------------------------------- Effect of exchange rate changes on cash ............................. 43 1,444 (1,477) -------------------------------- Net decrease in cash and cash equivalents ......................... (4,115) (7,948) (5,080) Cash and cash equivalents at beginning of year .................... 11,345 19,293 24,373 -------------------------------- Cash and cash equivalents at end of year .......................... $ 7,230 $ 11,345 $ 19,293 ================================ Supplemental cash flow information Cash paid during the year for: Income taxes ...................................................... $ 5,048 $ 5,685 $ 5,535 Interest .......................................................... 1,776 1,419 1,448
The accompanying notes are an integral part of these financial statements. 18 Quaker Chemical Corporation CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Foreign Capital in currency Common excess of Retained Unearned translation Treasury stock par value earnings compensation adjustments stock Total - ------------------------------------------------------------------------------------------------------------------------------------ (Dollars in thousands except per share amounts) Balance at December 31, 1992...... $ 9,664 $ 301 $ 90,834 $ 7,471 $ (6,628) $101,642 Net loss ....................... (1,758) (1,758) Dividends ($0.601/2 per share).. (5,578) (5,578) Shares issued upon exercise of options.................... (27) 109 82 Shares issued for employee stock purchase plan........... 196 528 724 Translation adjustment.......... (3,894) (3,894) Other........................... 59 106 165 ----------------------------------------------------------------------------------------- Balance at December 31, 1993...... 9,664 529 83,498 3,577 (5,885) 91,383 Net income...................... 9,402 9,402 Dividends ($0.631/2 per share).. (5,763) (5,763) Shares acquired under repurchase program............ (8,241) (8,241) Shares issued for employee stock purchase plan........... 106 409 515 Translation adjustment.......... 6,279 6,279 Other........................... 14 88 102 ----------------------------------------------------------------------------------------- Balance at December 31, 1994...... 9,664 649 87,137 9,856 (13,629) 93,677 Net income...................... 6,688 6,688 Dividends ($0.68 per share)..... (5,973) (5,973) Shares acquired under repurchase program............ (3,594) (3,594) Shares issued upon exercise of options.................... (141) 141 Shares issued for employee stock purchase plan........... 68 370 438 Restricted stock bonus.......... 175 $ (722) 700 153 Translation adjustment.......... 2,477 2,477 Other........................... 29 97 126 ----------------------------------------------------------------------------------------- Balance at December 31, 1995 .......... $ 9,664 $ 780 $ 87,852 $ (722) $ 12,333 $(15,915) $ 93,992 =========================================================================================
The accompanying notes are an integral part of these financial statements. 19 Quaker Chemical Corporation NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands except share and per share data) - -------------------------------------------------------------------------------- NOTE 1--SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation All majority-owned subsidiaries are included in Quaker Chemical Corporation's (the "Company's") consolidated financial statements, with appropriate elimination of intercompany balances and transactions. The consolidated balance sheet includes total assets of $103,307 and $86,723 and total liabilities of $27,995 and $21,705 in 1995 and 1994, respectively, of non-U.S. subsidiaries. The consolidated statement of operations includes net income of non-U.S. subsidiaries of $7,290, $4,372, and $3,729 in 1995, 1994, and 1993, respectively. Investments in associated (less than majority owned) companies are stated at the Company's equity in their underlying net assets. Translation of foreign currency Assets and liabilities of non-U.S. subsidiaries and associated companies are translated into U.S. dollars at the respective rates of exchange prevailing at the end of the year. Income and expense accounts are translated at average exchange rates prevailing during the year. Translation adjustments resulting from this process are recorded directly in shareholders' equity and will be included in income only upon sale or liquidation of the underlying investment. Cash and cash equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Inventories Inventories of the parent company are valued at the lower of cost or market value, with cost determined using the last-in, first-out (LIFO) method. Inventories of subsidiaries are valued primarily at first-in, first-out cost, but not in excess of market value. Property, plant and equipment Property, plant and equipment are recorded at cost, and capital leases are recorded at the present value of future minimum lease payments. Depreciation is computed using the straight-line method on an individual asset basis over the following estimated useful lives: buildings and improvements, 10 to 45 years; machinery and equipment, 3 to 15 years; and capital leases are depreciated over the remaining life of the lease. At December 31, 1995 and 1994, $1,214 of leased equipment and accumulated depreciation thereon in the amount $1,006 and $848 in 1995 and 1994, respectively, are included in property, plant and equipment. Expenditures for renewals and betterments which increase the estimated useful life or capacity of the assets are capitalized; expenditures for repairs and maintenance are charged to income. Excess of cost over net assets of acquired companies and other noncurrent assets Excess of cost over net assets of acquired companies and other noncurrent assets consist primarily of intangible assets arising from acquisitions, which are being amortized on a straight-line basis over periods of 5 to 40 years (5 to 20 years on acquisitions subsequent to 1991). At December 31, 1995 and 1994, accumulated amortization of the excess of cost over net assets of acquired companies amounted to $2,476 and $1,754, respectively. Capitalization of software The Company capitalizes certain computer software costs which are amortized utilizing the straight-line method over their estimated economic lives, not to exceed three years. At December 31, 1995 and 1994, the amount capitalized was $3,369 and $2,495 and accumulated amortization amounted to $788 and $0, respectively. Pension and postretirement benefit plans The Company's policy is to fund pension costs allowable for income tax purposes. See Note 6 for the accounting policies for pension and other postretirement benefits. Revenue recognition Sales are recorded primarily when products are shipped to customers. Other income, principally license fees and royalties offset by miscellaneous expenses, is recorded when earned. License fees from nonconsolidated non-U.S. associates and royalties from third parties amounted to $2,293, $2,364, and $1,706 in 1995, 1994 and 1993, respectively. Research and development costs Research and development costs are expensed as incurred. Company-sponsored research and development expenses during 1995, 1994 and 1993 were $11,307, $9,919, and $11,037, respectively. 20 Earnings per share Earnings per share calculations are based on the weighted average number of shares outstanding during the year. Concentration of credit risk Financial instruments, which potentially subject the Company to a concentration of credit risk, principally consist of cash equivalents, short-term investments, and trade receivables. The Company invests temporary and excess cash in money market securities and financial instruments having maturities typically within 90 days. The Company has not experienced losses from the aforementioned investments. The Company sells its principal products to the major steel, automotive and related companies around the world. The Company maintains allowances for potential credit losses. Historically, the Company has experienced some losses related to bankruptcy proceedings of major steel companies in the U.S.; however, such losses have not been material. Environmental liabilities and expenditures Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Accrued liabilities are exclusive of claims against third parties and are not discounted. Environmental costs and remediation costs are capitalized if the costs increase the value of the property from the date acquired or constructed and/or mitigate or prevent contamination in the future. Reclassifications Certain reclassifications of prior years' data have been made to improve comparability. Accounting estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingencies at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. Differences from those estimates are recorded in the period they become known. Income taxes Income taxes are provided in accordance with Statement of Financial Accounting Standards ("SFAS") 109, "Accounting for Income Taxes." Accounting standards change In March 1995, the Financial Accounting Standards Board issued SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This standard specifies when assets should be reviewed for impairment, how to determine if an asset is impaired, how to measure an impairment loss, and what disclosures are necessary in the financial statements. The Company expects to adopt SFAS 121, effective January 1, 1996, and has no current plans which would cause it to have a material impact on the Company's results of operations or financial condition. The Company expects to adopt SFAS 123, "Accounting for Stock-Based Compensation" effective January 1, 1996, and to continue to measure compensation cost for stock options and awards based on intrinsic value under Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees." Accordingly, the adoption of SFAS 123 will have no impact on the Company's results of operations or financial condition. - -------------------------------------------------------------------------------- NOTE 2--REPOSITIONING OF OPERATIONS In 1993, in response to changing economic and competitive market dynamics, the Company implemented a broad scope program of changes designed to improve operating efficiency. The repositioning program included activities associated with the consolidation of certain of the Company's facilities; closure and sale of the Company's manufacturing facilities in Pomona, California and Verona, Italy; the divestiture of nonstrategic business operations; and workforce reductions. The consolidated statement of operations for 1993 included charges before income taxes of $11,900 ($7,854 after tax, or $.85 per share) related to this program. Of the total 1993 charges, $5,200 related to the workforce reductions, while the remaining $6,700 provided for the other aspects of the program. The cash outlays in 1993 associated with the program were approximately $2,200. As of December 31, 1993, approximately $7,600 and $2,100 remained in accrued liabilities and other noncurrent liabilities, respectively. During 1994, the Company substantially completed the consolidation of certain facilities in the United States and Europe; sold its manufacturing facilities in Pomona, California and Verona, Italy; divested the businesses of QCP; and achieved a majority of the workforce reductions outlined in the 1993 program. As of December 31, 1994, it was determined that the repositioning activities would be accomplished for less than originally anticipated and accordingly, the Company reduced operating expenses by $525 ($347 after tax, or $.04 per share). The cash outlays in 1994 associated with the program were approximately $3,300. As of December 31, 1994, approximately $1,800 and $2,000 remained in accrued liabilities and other noncurrent liabilities, respectively. These future cash outlays primarily represented termination benefits related to the workforce reductions. 21 The Company's cash outlays associated with the program in 1995 were approximately $1,500. As of December 31, 1995, future cash outlays of approximately $600 and $1,700 remained in accrued liabilities and other noncurrent liabilities, respectively, and principally consist of payments for termination benefits related to the workforce reductions. - -------------------------------------------------------------------------------- NOTE 3--ASSOCIATED COMPANIES Summarized financial information of the associated companies (less than majority owned), in the aggregate, for 1995, 1994 and 1993 is as follows:
--------------------------------------- 1995 1994 1993 --------------------------------------- Current assets..................................... $22,319 $25,377 $22,515 Noncurrent assets.................................. 8,273 8,960 2,643 Current liabilities................................ 14,136 15,030 12,888 Noncurrent liabilities............................. 1,806 1,111 950 Net sales.......................................... $54,710 $49,949 $52,028 Operating income (a)............................... 2,689 4,293 5,654 Income before taxes................................ 929 3,242 4,287 Net income......................................... 9 1,725 2,165
(a) Net sales, less costs and expenses. - -------------------------------------------------------------------------------- NOTE 4--INVENTORIES Inventories valued under the last-in, first-out method amounted to $6,387 and $4,913 at December 31, 1995 and 1994, respectively. The estimated replacement costs for these inventories using the first-in, first-out method were approximately $7,259 and $6,407, respectively. - -------------------------------------------------------------------------------- NOTE 5--TAXES ON INCOME Taxes on income included in the consolidated statement of operations consist of the following for the year ended December 31: --------------------------------------- 1995 1994 1993 --------------------------------------- Current Federal........................... $ 872 $1,708 $(2,908) State............................. 53 122 144 Foreign........................... 4,399 4,984 3,489 --------------------------------------- 5,324 6,814 725 Deferred Federal........................... 103 (495) (478) State............................. Foreign........................... (540) (403) (13) --------------------------------------- Total............................... $4,887 $5,916 $ 234 ======================================= 22 Total deferred tax assets and liabilities are comprised of the following at December 31:
----------------------------------------- 1995 1994 ----------------------------------------- Non- Non- Current current Current current ----------------------------------------- Retirement benefits........................... $ 238 $ 81 Allowance for doubtful accounts............... 183 82 Insurance and litigation reserves............. 647 350 Postretirement benefits....................... $ 2,995 $ 2,981 Supplemental retirement benefits.............. 637 568 Alternative minimum tax carryforward.......... 432 432 Amortization.................................. 524 Repositioning charges......................... 151 622 997 775 Other......................................... 196 139 66 215 ----------------------------------------- Total deferred tax assets..................... $ 1,415 $ 5,349 $ 1,576 $ 4,971 ========================================= Depreciation.................................. $ 2,829 $ 2,868 Other......................................... 148 213 ------- ------- Total deferred tax liabilities................ $ 2,977 $ 3,081 ======= =======
The following is a reconciliation of income taxes at the Federal statutory rate with income taxes recorded by the Company for the year ended December 31:
----------------------------- 1995 1994 1993 ----------------------------- Income tax provision (benefit) at the Federal statutory tax rate................. $ 4,113 $ 5,073 $ (740) State income tax provisions, net................................................. 35 81 98 Prior year tax settlement........................................................ 710 Non-deductible divestiture charges............................................... 503 Foreign taxes on earnings at rates different than the Federal statutory rate..... 30 143 723 Miscellaneous items, net......................................................... 206 (91) 153 ----------------------------- Taxes on income.................................................................. $ 4,887 $ 5,916 $ 234 =============================
United States income taxes have not been provided on the undistributed earnings of non-U.S. subsidiaries since it is the Company's intention to continue to reinvest these earnings in those subsidiaries for working capital and expansion needs. The amount of such undistributed earnings at December 31, 1995 was approximately $63,000. Any income tax liability which might result from ultimate remittance of these earnings is expected to be substantially offset by foreign tax credits. The benefits of net operating loss carryforwards approximating $1,200, expiring in 1996 and later, have been recorded. - -------------------------------------------------------------------------------- NOTE 6--EMPLOYEE BENEFITS Pension plans The Company maintains various noncontributory retirement plans covering substantially all of its employees in the U.S. and certain other countries. The benefits for the plans are based on a number of factors, the most significant of which are years of service and levels of compensation either during employment or near retirement. With the exception of the Company's Netherlands subsidiaries, the retirement plans of the non-U.S. subsidiaries are, for the most part, either fully insured or integrated with the local governments' plans and are not subject to the provisions of SFAS 87, "Employers' Accounting for Pensions." On January 1, 1995, after determining that the plans of the Company's subsidiaries in the Netherlands are subject to the provisions of SFAS 87, the Company commenced reporting under the current accounting standard for these subsidiaries. The effect of this was not material. The pension costs for all plans include the following components:
----------------------------- 1995 1994 1993 ----------------------------- Service cost--benefits earned during the period.................................. $ 1,149 $ 880 $ 809 Interest cost on projected benefit obligation.................................... 3,314 2,449 2,335 Net investment (income) loss on plan assets: Actual......................................................................... (7,837) (283) (2,820) Deferral of difference between actual and expected income...................... 4,373 (2,576) 98 Other amortization, net.......................................................... (320) (63) (110) ----------------------------- Net pension costs of plans subject to SFAS 87.................................... 679 407 312 Pension costs of plans not subject to SFAS 87.................................... 98 962 904 ----------------------------- Total pension costs.............................................................. $ 777 $ 1,369 $ 1,216 =============================
23 The following table summarizes the funded status of the Company's defined benefit pension plans, the largest of which is in the U.S., and the related amounts recognized in the Company's consolidated balance sheets as of December 31:
------------------------------------------------------------ 1995 1994(b) ------------------------------------------------------------ Assets Accumulated Assets Accumulated exceed benefits exceed benefits accumulated exceed accumulated exceed benefits assets(a) benefits assets(a) ------------------------------------------------------------ Actuarial present value of: Vested benefit obligation................... $39,839 $ 2,556 $26,479 $ 2,492 ------------------------------------------------------------ Accumulated benefit obligation............. $40,026 $ 2,640 $26,674 $ 2,492 Projected benefit obligation (PBO)............ 44,788 2,817 29,608 2,669 Plan assets at market value................... 47,857 29,290 ------------------------------------------------------------ Plan assets greater (less) than PBO........... 3,069 (2,817) (318) (2,669) Unrecognized cumulative net (gain) loss....... (1,792) 961 (215) 1,005 Unrecognized prior service costs.............. 1,722 1,828 Unrecognized transition obligation ........... (4,041) (7) (1,916) 18 ------------------------------------------------------------ Accrued pension costs ........................ $ (1,042) $(1,863) $ (621) $(1,646) ============================================================
(a) Substantially all of this relates to nonqualified, unfunded supplemental pension plans. (b) Does not include amounts relating to the Netherlands subsidiaries' plans, for which information is not available. The U.S. funded plan is the largest plan. The significant assumptions for the U.S. plan were as follows: ---------------------- 1995 1994 1993 ---------------------- Discount rate for projected benefit obligation .... 7.375% 8.0% 7.5% Assumed long-term rates of compensation increases . 5.5% 5.5% 5.5% Long-term rate of return on plan assets............ 9.25% 9.25% 9.5% All other pension plans used assumptions in determining the actuarial present value of the projected benefit obligations that are consistent with (but not identical to) those of the U.S. plan. Profit sharing plan The parent company also maintains a qualified profit sharing plan covering all employees other than those who are compensated on a commission basis. Contributions for 1994 were $367. No contributions were made in 1995 or 1993. Other postretirement and postemployment benefits The Company has postretirement benefit plans that provide medical and life insurance benefits for certain retired employees of the parent company. These benefits vary based on age, years of service and retirement date. Coverage of health benefits under the plan may require the retiree to make payments where the insured equivalent costs exceed the Company's fixed contribution. The cost of the life insurance benefit plan, which provides a flat two thousand dollars per retiree, is noncontributory. Both the medical and life insurance plans are currently unfunded. The components of periodic postretirement benefit costs are as follows:
------------------------------ 1995 1994 1993 ------------------------------ Service cost--benefits attributed to service during the period.................. $ 65 $ 67 $ 79 Interest cost on accumulated benefit obligation and amortization............... 594 572 650 ------------------------------ Postretirement benefit cost.................................................... $659 $ 639 $ 729 ==============================
The status of the plan at December 31, 1995 and 1994 is as follows: -------------------- 1995 1994 -------------------- Retirees................................................ $6,877 $6,542 Fully eligible active participants...................... 59 71 Other participants...................................... 1,199 1,265 -------------------- Total accumulated postretirement benefit obligation..... 8,135 7,878 Unrecognized actuarial gain ............................ 674 889 -------------------- Net unfunded postretirement benefit liability........... $8,809 $8,767 ==================== 24 The discount rate used in determining the accumulated postretirement benefit obligation was 7.375% and 8.0% in 1995 and 1994, respectively. In valuing costs and liabilities, different health care cost trend rates were used for retirees under and over age 65. The average assumed rate for medical benefits for all retirees was 8.5% in 1995 - gradually decreasing to 5.5% over 11 years. A 1% increase in the health care cost trend rate would increase aggregate service cost for 1995 by $39 and the accumulated postretirement benefit obligation as of December 31, 1995 by $508. The parent company maintains a plan under which the Company will provide, in certain cases, supplemental retirement benefits to officers of the parent company. Benefits payable under the plan are based on a combination of years of service and existing postretirement benefits. Included in total pension costs are charges of $276, $353, and $270 in 1995, 1994 and 1993, respectively, representing the annual accrued benefits under this plan. Effective January 1, 1993, the Company adopted the provisions of SFAS 112, "Employer's Accounting for Postemployment Benefits." The cumulative effect of adoption of SFAS 112 was not material. - -------------------------------------------------------------------------------- NOTE 7--DEBT, NOTES PAYABLE AND CAPITAL LEASES Long-term debt, notes payable and capital leases consisted of the following at December 31: -------------------- 1995 1994 -------------------- Industrial development authority monthly floating rate (4.0% at December 31, 1995) demand bonds maturing 2014............................ $ 5,000 $ 5,000 6.64% notes payable due July 8, 1997.................... 6,667 10,000 Notes payable due 1996 to 1997.......................... 2,126 Capital leases.......................................... 112 476 Other debt obligations due 1996 to 1997, interest rates ranging to 10.8%................................ 394 428 -------------------- 14,299 15,904 Less current portion.................................... 4,999 3,697 -------------------- $ 9,300 $12,207 ==================== The 6.64% notes payable require semiannual principal payments of $1,667 beginning July 8, 1993 through 1997. The long-term financing agreements require the maintenance of certain financial covenants of which the Company is in compliance. The notes payable due in 1996 and 1997 are non-interest bearing and are payable in three equal installments. During the next five years, payments on long-term debt and notes payable are due as follows: $4,999 and $4,300 in 1996 and 1997, respectively, and $0 in 1998, 1999, and 2000. At December 31, 1995, the Company had outstanding short-term borrowings with banks under non-confirmed lines of credit in the aggregate of $20,549. The weighted average interest rate on such borrowings was 6.0% during 1995. The parent company also has available a $10,000 unsecured line of credit that is renewed annually. Any borrowings under this line of credit will be at the bank's most competitive rate of interest in effect at the time. At December 31, 1995 and 1994, the value at which the financial instruments are recorded is not materially different than the fair market value. - -------------------------------------------------------------------------------- NOTE 8--SHAREHOLDERS' EQUITY Treasury stock is held for use by the various Company plans which require the issuance of the Company's common stock. The Company is authorized to issue 10,000,000 shares of preferred stock, $1.00 par value, subject to approval by the Board of Directors. The Board of Directors may designate one or more series of preferred stock and the number of shares, rights, preferences and limitations of each series. No preferred stock has been issued. Under provisions of a stock purchase plan which permits employees to purchase shares of stock at 85% of the market value, 26,933 shares, 29,736 shares, and 38,399 shares were issued from treasury in 1995, 1994 and 1993, respectively. The number of shares that may be purchased by an employee in any year is limited by factors dependent upon the market value of the stock and the employee's base salary. At December 31, 1995, 190,247 shares are available for purchase under the plan. The Company has a long-term performance incentive plan for key employees which provides for the granting of options to purchase stock at prices not less than market value on the date of the grant. Most options are exercisable one year after the date of the grant for a period of time determined by the Company not to exceed ten years from the date of the grant. 25 The table below summarizes transactions in the plan during 1995, 1994 and 1993.
- ------------------------------------------------------------------------------------------------------------------- 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------- Number of Option price Number of Option price Number of Option price shares per share shares per share shares per share - ------------------------------------------------------------------------------------------------------------------- Options outstanding at January 1........... 633,087 $11.00--$24.20 626,534 $11.00--$24.20 425,776 $11.00--$19.75 Options granted.......... 459,056 $18.63--$22.50 6,553 $15.75--$15.88 214,444 $21.00--$24.20 Options exercised........ (44,842) $12.50--$17.75 (13,686) $12.50--$19.75 Options expired.......... (151,697) $17.75--$22.00 Options outstanding at December 31,........ 895,604 $11.00--$24.20 633,087 $11.00--$24.20 626,534 $11.00--$24.20 =================================================================================================================== Options exercisable at December 31,........ 486,548 $11.00--$24.20 626,534 $11.00--$24.20 412,090 $11.00--$19.75 ===================================================================================================================
Options were exercised for cash and the surrender of 34,555 and 5,739 previously outstanding shares in 1995 and 1993, respectively, resulting in the net issuance of 10,287 shares in 1995 and 7,947 shares in 1993. No options were exercised in 1994. Options to purchase 319,947 shares were available at December 31, 1995 for future grants. The plan also provides for the issuance of performance incentive units, the value of which is determined based on operating results over a four-year period. The effect on operations of the change in the estimated value of incentive units during the year was zero in 1995, 1994 and 1993, respectively. On February 7, 1990, the Company declared a dividend distribution to shareholders of record on February 20, 1990 which, after giving effect for the three-for-two stock split effective July 30, 1990, was in the form of two stock purchase rights (the "Rights") for each three shares of common stock outstanding. The Rights become exercisable if a person or group acquires or announces a tender offer which would result in such person's acquisition of 20% or more of the Company's common stock. The Rights also become exercisable if the Board of Directors declares a person to be an "adverse person" and that person has obtained not less than 10% of the outstanding shares of the Company's common stock. Each Right, when exercisable, entitles the registered holder to purchase one one-hundredth of a share of a newly authorized Series A preferred stock at an exercise price of seventy-two dollars per share subject to certain anti-dilution adjustments. In addition, if a person or group acquires 20% or more of the outstanding shares of the Company's common stock, without first obtaining Board of Directors' approval, as required by the terms of the Rights Agreement, or a person is declared an adverse person, each Right will then entitle its holder (other than such person or members of any such group) to purchase, at the Right's then current exercise price, a number of shares of the Company's common stock having a total market value of twice the Right's exercise price. In the event that the Company merges with or transfers 50% or more of its assets or earnings to any entity after the Rights become exercisable, holders of Rights may purchase, at the Right's then current exercise price, common stock of the acquiring entity having a value equal to twice the Right's exercise price. In addition, at any time after a person acquires 20% of the outstanding shares of common stock and prior to the acquisition by such person of 50% or more of the outstanding shares of common stock, the Company may exchange the Rights (other than the Rights which have become null and void), in whole or in part, at an exchange ratio of one share of common stock or equivalent share of preferred stock, per Right. The Board of Directors can redeem the Rights for $.01 per Right at any time prior to the acquisition by a person or group of beneficial ownership of 20% or more of the Company's common stock or a person being declared an adverse person. Until a Right is exercised, the holder thereof will have no rights as a shareholder of the Company, including without limitation, the right to vote or to receive dividends. Unless earlier redeemed or exchanged, the Rights will expire on February 20, 2000. Restricted stock bonus The Company has granted an initial stock bonus of 50,000 shares of the Company's common stock to its chief executive officer of which 5,000 shares were paid to him immediately, and the balance of the shares were registered in his name and are being held by the Company for delivery to him in installments of 15,000 shares each on October 2, 1996, 1997, and 1998 if he is employed by the Company on those dates. The remaining shares subject to forfeiture provisions have been recorded as unearned compensation and are presented as a separate component of shareholders' equity. The unearned compensation is being charged to selling, administrative and general expenses over the three-year vesting period and was $153 in 1995. 26 - -------------------------------------------------------------------------------- NOTE 9--BUSINESS SEGMENTS The Company operates primarily in one business segment--the manufacture and sale of industrial chemical specialty products. The Company has both U.S. and non-U.S. operations which are summarized for 1995, 1994 and 1993 as follows:
---------------------------------- 1995 1994 1993 ---------------------------------- Net sales United States...................................... $102,651 $ 97,338 $110,067 Europe............................................. 99,222 80,624 74,090 Asia/Pacific....................................... 18,715 14,912 10,702 South America...................................... 6,450 1,802 145 ---------------------------------- Consolidated....................................... $227,038 $194,676 $195,004 ================================== Income (loss) before taxes United States...................................... $ 3,357 $ 7,960 $ 5,164 Europe............................................. 13,344 11,076 10,745 Asia/Pacific....................................... 2,214 1,630 844 South America...................................... (1,188) (1,163) (192) ---------------------------------- Operating profit................................... 17,727 19,503 16,561 Repositioning credits (charges).................... 525 (11,900) Nonoperating expenses.............................. (5,630) (5,107) (6,838) Equity in net (loss) income of associated companies (78) 779 1,001 Minority interest in net income of subsidiaries.... (444) (382) (348) ---------------------------------- Consolidated....................................... $ 11,575 $ 15,318 $ (1,524) ================================== Identifiable assets United States...................................... $ 52,262 $ 51,255 $ 70,889 Europe............................................. 66,498 65,845 55,427 Asia/Pacific....................................... 11,246 8,685 6,350 South America...................................... 3,989 1,426 638 Investments in associated companies................ 10,715 9,885 6,224 Nonoperating assets................................ 40,698 33,076 31,457 ---------------------------------- Consolidated....................................... $185,408 $170,172 $170,985 ==================================
Transfers between geographic areas are not material. Operating profit comprises revenue less related costs and expenses. Nonoperating expenses primarily consist of general corporate expenses identified as not being a cost of operations, interest expense, interest income and license fees from nonconsolidated associates. Nonoperating assets, consisting primarily of cash equivalents and short-term investments, have not been included with identifiable assets. No single customer accounted for 10% of net sales in 1995, 1994 or 1993. A substantial portion of consolidated sales on a global basis are made to the steel industry (see Classification of Products by Markets Served), and as a result, accounts receivable generally reflect a similar distribution of receivables from customers in these markets. - -------------------------------------------------------------------------------- NOTE 10--BUSINESS ACQUISITIONS AND DIVESTITURES During the three years ended December 31, 1995, the Company completed the acquisitions or divestitures set forth below. Each acquisition was accounted for as a purchase, and, accordingly, the purchase price has been allocated where appropriate between the fair value of identifiable net assets acquired and the excess of cost over net assets of acquired companies. The consolidated financial statements include the operating results of each business acquired from the date of acquisition. Pro forma results of operations have not been presented for any of the acquisitions or divestitures because the effects of these transactions were not material. Effective May 31, 1995, the Company acquired 90% of the common stock of Celumi S.A., a metalworking chemical specialty business in Brazil for approximately $7,700 in cash and notes. The excess of cost over the estimated fair value of net assets acquired amounted to approximately $6,500 which has been accounted for as goodwill and is being amortized over 20 years. On March 29, 1995, the Company entered into an agreement with Wuxi Oil Refinery, for the creation of a joint venture in The People's Republic of China. The Company's initial contribution to the venture, which was partially funded in 1995, will be less than a $1,000 in cash and certain assets related to the formulation, manufacture and sale of chemical specialty products for the steel industry. Effective December 28, 1994, the Company acquired for approximately $1,800 in cash certain assets relating to the formulation, manufacture, and sale of cutting fluids from Perstorp AB, a Swedish company. Pursuant to the plans identified in the Company's 1993 repositioning program (see Note 2), the sales of certain of the Company's businesses and assets were completed in 1994. Effective November 7, 1994, the Company completed 27 the sale of the flooring business of QCP for approximately $2,800. In addition, effective October 20, 1994 and October 1, 1994, respectively, the Company completed the sale of its Verona, Italy and Pomona, California manufacturing facilities, which had ceased production in 1993 and mid-1994, for approximately $2,600 in cash and $200 due within one year. Effective September 30, 1994, the Company completed the sale of the coatings and waterproofing business of QCP for approximately $8,100. On March 24, 1994, the Company entered into an agreement with Fluid Recycling Services, Incorporated for the creation of a 50/50 joint venture. During 1994 and 1995, the Company made cash investments and advances of approximately $4,500 and $2,000, respectively, with additional investments expected over the next few years based on the growth of the venture. Effective May 14, 1993, the Company acquired for approximately $10,700 in cash 100% of the common stock of Raffineries de l'Ile de France (RIF), a metalworking chemical specialty business in France. The excess of cost over the estimated fair value of net assets acquired amounted to approximately $5,700 million which has been accounted for as goodwill and is being amortized over 20 years. As part of a plan to exit from the petroleum production chemicals market, effective July 27, 1993, the Company completed the sale of its petroleum production chemical operations' assets, the principal component of which was the SULFA-SCRUB(R) patents and technology, to the Petrolite Corporation for $6,500 in cash, $2,000 due within three years and future royalty payments. In addition, the agreement of sale provides that the Petrolite Corporation grant back to the Company a license to sell products incorporating the technology in certain markets not serviced by the Petrolite Corporation. - -------------------------------------------------------------------------------- NOTE 11--COMMITMENTS AND CONTINGENCIES A wholly-owned non-operating subsidiary of the Company is a co-defendant in claims filed by multiple claimants alleging injury due to exposure to asbestos. Although there can be no assurance regarding the outcome of existing claims proceedings, the subsidiary believes that it has made adequate accruals for all potential uninsured liabilities related to claims of which it is aware. At December 31, 1995, the subsidiary has accrued approximately $500 to provide for anticipated uninsured claims-related liabilities. In addition, in 1995 the subsidiary received a cash payment of $2,500 from one of its insurance carriers in settlement over certain disputed coverage. The Company has accrued for certain environmental investigatory and noncapital remediation costs consistent with the policy set forth in Note 1. In 1994, the Company identified certain soil and groundwater contamination at AC Products, Inc. ("ACP"), a wholly-owned subsidiary. Pursuant to a plan submitted to and approved by the Santa Ana California Regional Water Quality Board, a remediation effort was undertaken by ACP during 1995. The Company believes that the potential uninsured liability associated with the completion of the remediation effort ranges from $800 to $1,100, for which the Company has accrued approximately $800. Additionally, although there can be no assurance regarding the outcome of other environmental matters, the Company believes that it has made adequate accruals for costs associated with other environmental problems of which it is aware. At December 31, 1995 and 1994, the Company has accrued approximately $600 and $400, respectively, to provide for such anticipated future environmental assessments and remediation costs. 28 Quaker Chemical Corporation REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors of Quaker Chemical Corporation In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, cash flows and shareholders' equity present fairly, in all material respects, the financial position of Quaker Chemical Corporation (the "Company") and its subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Thirty South Seventeenth Street Philadelphia, Pennsylvania 19103 February 21, 1996 29 Quaker Chemical Corporation ELEVEN-YEAR FINANCIAL SUMMARY
1995 1994(1) 1993(2) - ------------------------------------------------------------------------------------------------------------------------------------ (Dollars in thousands except per share data and number of employees) Summary of Operations Net sales .......................................................... $ 227,038 $ 194,676 $ 195,004 Income (loss) before taxes and cumulative effect of change in accounting principle ............................................. 11,575 15,318 (1,524) Cumulative effect of change in accounting for postretirement benefits Net income (loss) .................................................. 6,688 9,402 (1,758) Per share (3) Income (loss) before cumulative effect of change in accounting principle ........................................ .76 1.03 (.19) Cumulative effect of change in accounting for postretirement benefits Net income (loss) ................................................ .76 1.03 (.19) Dividends ........................................................ .68 .63 1/2 .60 1/2 Financial Position Current assets ..................................................... 86,718 83,400 84,387 Current liabilities ................................................ 60,868 42,754 42,642 Working capital .................................................... 25,850 40,646 41,745 Property, plant and equipment, net ................................. 56,309 51,694 55,541 Total assets ....................................................... 185,408 170,172 170,985 Long-term debt, notes payable and capital leases ................... 9,300 12,207 16,095 Shareholders' equity ............................................... 93,992 93,677 91,383 Other Data Current ratio ...................................................... 1.4/1 2.0/1 2.0/1 Capital expenditures (4) ........................................... 9,833 9,255 8,960 Net income (loss) as a % of net sales (5) ................................................... 2.9% 4.8% (0.9)% Return on average shareholders' equity (5) ......................................... 7.1% 10.2% (1.8)% Shareholders' equity per share at end of year (3) ...................................................... 10.85 10.62 9.89 Common stock price per share range (3): High ............................................................. 19 19 1/2 24 5/8 Low .............................................................. 11 14 3/4 14 1/4 Number of shares outstanding at end of year (3) ...................................................... 8,664 8,819 9,242 Number of employees at end of year: Consolidated subsidiaries ........................................ 870 743 865 Associated companies ............................................. 235 212 141 1992 1991 1990 1989 - ------------------------------------------------------------------------------------------------------------------------------------ Summary of Operations Net sales ..................................................... $ 212,491 $ 191,051 $ 201,474 $ 181,660 Income (loss) before taxes and cumulative effect of change in accounting principle ........................................ 19,045 16,888 22,580 19,647 Cumulative effect of change in accounting for postretirement benefits ................................. (5,675) Net income (loss) ............................................. 12,098 5,115 14,106 12,840 Per share (3) Income (loss) before cumulative effect of change in accounting principle ................................... 1.33 1.20 1.51 1.35 Cumulative effect of change in accounting for postretirement benefits ............................... (.63) Net income (loss) ........................................... 1.33 .57 1.51 1.35 Dividends ................................................... .57 .53 .47 .41 Financial Position Current assets ................................................ 85,567 82,725 84,833 75,427 Current liabilities ........................................... 28,126 36,592 40,342 27,848 Working capital ............................................... 57,441 46,133 44,491 47,579 Property, plant and equipment, net ............................ 52,179 48,661 46,315 36,539 Total assets .................................................. 166,613 159,121 152,408 131,430 Long-term debt, notes payable and capital leases .............. 18,604 5,219 5,453 5,665 Shareholders' equity .......................................... 101,642 98,898 99,113 90,440 Other Data Current ratio ................................................. 3.0/1 2.3/1 2.1/1 2.7/1 Capital expenditures (4) ...................................... 7,226 8,420 12,663 7,553 Net income (loss) as a % of net sales (5) .............................................. 5.7% 5.6% 7.0% 7.1% Return on average shareholders' equity (5) .................................... 12.1% 10.9% 14.9% 14.8% Shareholders' equity per share at end of year (3) ................................................. 11.06 10.95 11.11 9.55 Common stock price per share range (3): High ........................................................ 26 22 1/4 19 1/4 15 5/8 Low ......................................................... 18 3/4 15 12 12 1/2 Number of shares outstanding at end of year (3) ................................................. 9,188 9,028 8,921 9,473 Number of employees at end of year: Consolidated subsidiaries ................................... 842 840 819 829 Associated companies ........................................ 130 187 261 154 1988 1987 1986 1985 - ------------------------------------------------------------------------------------------------------------------------------------ Summary of Operations Net sales ...................................................... $166,662 $147,455 $128,059 $122,745 Income (loss) before taxes and cumulative effect of change in accounting principle ......................................... 18,939 17,511 14,103 12,872 Cumulative effect of change in accounting for postretirement benefits Net income (loss) .............................................. 11,731 10,423 8,530 7,580 Per share (3) Income (loss) before cumulative effect of change in accounting principle .................................... 1.21 1.05 .84 .73 Cumulative effect of change in accounting for postretirement benefits Net income (loss) ............................................ 1.21 1.05 .84 .73 Dividends .................................................... .37 .34 .29 .26 Financial Position Current assets ................................................. 69,326 66,633 58,460 57,529 Current liabilities ............................................ 26,924 29,447 16,207 19,440 Working capital ................................................ 42,402 37,186 42,253 38,089 Property, plant and equipment, net ............................. 32,821 32,622 29,472 24,612 Total assets ................................................... 121,125 118,367 98,512 93,891 Long-term debt, notes payable and capital leases ............... 5,000 5,000 8,735 9,025 Shareholders' equity ........................................... 82,884 78,079 66,654 59,200 Other Data Current ratio .................................................. 2.6/1 2.3/1 3.6/1 3.0/1 Capital expenditures (4) ....................................... 5,295 3,705 5,223 6,139 Net income (loss) as a % of net sales (5) ............................................... 7.0% 7.1% 6.7% 6.2% Return on average shareholders' equity (5) ..................................... 14.6% 14.4% 13.6% 14.0% Shareholders' equity per share at end of year (3) .................................................. 8.57 8.08 6.71 5.67 Common stock price per share range (3): High ......................................................... 16 1/8 18 13 5/8 9 1/8 Low .......................................................... 11 3/8 9 8 6 Number of shares outstanding at end of year (3) .................................................. 9,669 9,644 9,935 10,440 Number of employees at end of year: Consolidated subsidiaries .................................... 832 824 795 785 Associated companies ......................................... 150 140 134 136
(1) The results of operations for 1994 include net repositioning credits of $347 or $0.04 per share. Excluding these credits, net income for 1994 was $9,055 or $0.99 per share. (2) The results of operations for 1993 include net repositioning charges of $7,854 or $0.85 per share. Excluding these charges, net income for 1993 was $6,096 or $0.66 per share. (3) Restated to give retroactive effect to a three-for-two split in 1990. (4) Capital expenditures prior to 1986 are stated net of dispositions. (5) Calculated for 1991 using $10,790 which is the net income before the cumulative effect of change in accounting principle. 30-31 SUPPLEMENTAL FINANCIAL INFORMATION Classification of Products by Markets Served (unaudited) Consolidated net sales comprise chemical specialty and other products classified by markets served as follows:
(Dollars in thousands) -------------------------------------------------------------------------------------------- 1995 1994 1993 1992 1991 -------------------------------------------------------------------------------------------- Steel........... $103,765 46% $ 90,549 47% $ 89,255 46% $ 94,483 44% $ 78,357 41% Metalworking.... 85,949 38 68,576 35 57,826 30 58,719 28 51,106 27 Pulp and paper.. 16,049 7 13,010 7 12,169 6 15,042 7 16,760 9 Other........... 21,275 9 22,541 11 35,754 18 44,247 21 44,828 23 -------------------------------------------------------------------------------------------- $227,038 100% $194,676 100% $195,004 100% $212,491 100% $191,051 100% ============================================================================================
Information on Quaker's markets appears on the inside front cover of this report. Quarterly Results (unaudited)
(Dollars in thousands except per share data) - ----------------------------------------------------------------------------------------------------------------- First Second Third Fourth --------------------------------------------- 1995 Net sales..................................................... $54,527 $59,035 $57,872 $55,604 Operating income (1).......................................... 3,282 3,770 3,408 973 Net income.................................................... 1,915 2,471 2,099 203 Net income per share.......................................... $.22 $.28 $.24 $.02 1994 Net sales..................................................... $45,093 $47,347 $50,117 $52,119 Operating income (1 and 2).................................... 3,356 3,213 3,754 3,191 Net income.................................................... 2,249 2,191 2,353 2,609 Net income per share.......................................... $.24 $.24 $.26 $.29 1993 Net sales..................................................... $48,361 $51,343 $48,441 $46,859 Operating income (loss) (1 and 3)............................. 3,594 (919) 1,092 (7,274) Net income (loss)............................................. 2,724 (449) 730 (4,763) Net income (loss) per share................................... $.30 $(.05) $.08 $(.52)
(1) Net sales, less costs and expenses. (2) The fourth quarter includes repositioning credits of $525. (3) The second and fourth quarters include repositioning charges of $3,500 and $8,400, respectively. Stock Market and Related Security Holder Matters During the past two years, the common stock of the Company has been traded in the National Over-the-Counter market at the price ranges indicated below, and the following quarterly dividends per share have been declared as indicated:
Range of NASDAQ System Quotations Dividends Declared - ------------------------------------------------------------------------------------------------------------------ 1995 1994 1995 1994 - ------------------------------------------------------------------------------------------------------------------ High Low High Low First quarter...................... $19 $14 1/2 $19 1/2 $14 3/4 $.17 $.15 1/2 Second quarter..................... 18 14 1/2 18 3/4 16 .17 .15 1/2 Third quarter...................... 17 1/2 15 18 3/4 17 1/4 .17 .15 1/2 Fourth quarter..................... 18 1/2 11 18 3/4 17 1/4 .17 .17 - ------------------------------------------------------------------------------------------------------------------
As of January 15, 1996, there were 1,013 shareholders of record of the Company's common stock, $1 par value, its only outstanding class of equity securities. ---------------- Copies of the Company's Form 10-K for the year ended December 31, 1995 as filed with the Securities and Exchange Commission will be provided without charge on request to Quaker Chemical Corporation, Attention: Irene M. Kisleiko, Assistant Corporate Secretary, Conshohocken, PA 19428. ---------------- 32 EX-21 5 SUBSIDIARIES AND AFFILIATES OF THE REGISTRANT EXHIBIT 21 SUBSIDIARIES AND AFFILIATES OF THE REGISTRANT Percentage of voting securities Jurisdiction of owned directly or Name Incorporation indirectly by Quaker ---- ------------- -------------------- *Quaker Chemical Europe B.V. Holland 100% *Quaker Chemical B.V. Holland 100% *Quaker Chemical, S.p.A. Italy 100% +*Quaker Chemical Holdings UK United Kingdom 100% Limited *Quaker Chemical Limited United Kingdom 100% *Quaker Chemical S.A. France 100% **Quaker Chemical South Republic of 50% Africa (Pty.) Limited South Africa *Quaker Chemical, S.A. Spain 100% *Quaker Chemical, S.A. Argentina 100% *Quaker Chemical Industria e Brazil 100% Comercio Ltda. *Celumi Lubrificantes Industriais Brazil 90% Ltda. **Kelko Quaker Chemical, S.A. Venezuela 50% *Quaker Chemical Limited Hong Kong 100% *Wuxi Quaker Chemical China 60% Company Limited +*Quaker Chemical South East Singapore 100% Asia Pte. Ltd. **Nippon Quaker Chemical, Ltd. Japan 50% *Quaker Chemical (Australasia) State of New South 51% Pty. Limited Wales, Australia **TecniQuimia Mexicana Mexico 40% S.A. de C.V. +*SB Decking, Inc. (formerly Delaware, U.S.A. 100% Selby, Battersby & Co.) *Quaker Chemical Corporation Delaware, U.S.A. 100% +Quaker Chemical Management, Delaware, U.S.A. 100% Inc. *AC Products, Inc. California, U.S.A. 100% **Fluid Recycling Services Michigan, U.S.A. 50% Company - ------------------ + A non-operating company. * Included in the consolidated financial statements. ** Accounted for in the consolidated financial statements under the equity method. EX-23 6 CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23 Consent of Independent Accountants We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 2-57924, No. 33-54158, and No. 33-51655) of Quaker Chemical Corporation of our report dated February 21, 1996 appearing on page 29 of the 1995 Annual Report to Shareholders which is incorporated in this Annual Report on Form 10-K. PRICE WATERHOUSE LLP Philadelphia, PA March 29, 1996 EX-27 7 ARTICLE 5 FDS FOR 10-K
5 1,000 12-MOS DEC-31-1995 DEC-31-1995 7,230 0 47,904 939 21,633 86,718 118,589 62,280 185,408 60,868 5,000 0 0 9,664 84,328 185,408 227,038 229,128 135,490 215,605 0 0 1,712 12,097 4,887 6,688 0 0 0 6,688 .76 .76
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